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Forex - EUR/USD drops on sour European factory data

Published 05/02/2012, 08:08 PM
Updated 05/02/2012, 08:10 PM
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Investing.com - The euro slid against the dollar on Thursday after weak eurozone manufacturing data fueled sentiments the European Central Bank will consider intervening in the continent's bond markets to juice the economy.

Tepid private-sector unemployment data in the U.S. tempered the dollar's gains against the euro, however.

In Asian trading on Thursday, EUR/USD was trading down 0.07% at 1.3149, up from a session low of 1.3148, and off from a high of 1.3160.

The pair was likely to test support at 1.3105, the low on April 23, and resistance at 1.3284, the high of May 1.

In Europe, the eurozone manufacturing purchasing managers’ index dropped to 34-month low of 45.9 in April, down from 47.7 in March and missing estimates of 46.0.

Manufacturing output in Europe's largest economy, Germany, fell at the fastest rate since July 2009, with its manufacturing PMI dropping to 46.2 in April from 46.4 in March and below market estimates for 46.3.

Unemployment rates remain elevated across much of Europe, and investors grew increasingly concerned that the European Central Bank will hint at monetary easing measures after a meeting later Thursday.

Data out of the U.S. was far from robust.

U.S. payroll processer ADP said that private-sector, non-farm employment rose by 119,000 in April, the lowest gain since last September, after a 201,000 rise in March.

Analysts were hoping to see a figure around 178,000 in April.

The European Central Bank is due to address interest rates later Thursday and hopes that ECB President Mario Draghi will at least hint the European monetary authority will take easing measures to loosen credit conditions and spark more growth were building in foreign exchange markets, which weakened the euro.

The euro, meanwhile, was down against the pound and down against the yen, with EUR/GBP down 0.04% at 0.8119 and EUR/JPY trading down 0.09% at 105.36.

Later Thursday, all eyes will be on the European Central Bank and press conference afterwards.

In the U.S., markets will keep an eye on weekly initial jobless claims.







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